Functional beverage is a non-alcoholic drink which provides specific health benefits and contains non-traditional ingredients like minerals, vitamins, amino acids or added raw fruits. The global functional beverage market is projected to grow at a CAGR of 9.3% during the forecasted period 2017-2022.

Verday Chlorophyll Water expanded the line of deliciously refreshing healthy green waters by launching a new flavor, Blueberry.

There has been an increased demand for functional hydration and more. Its aim can be 'beauty beverages' with collagen, cinnamon extracts in soft drinks, to tackle diabetes, or Omega-3s for heart health. The regulators such as EFSA and the FDA inspect the product safety and health claims.

Market Dynamics

Demand coming from millennial generation, rising health care & wellness awareness and busy lifestyles have led to the growing demand for convenience beverages. These factors along with the idea of “healthiness-on-the-go” and innovations in the drink flavors have led to surge in demand for sports and energy drinks which are also the alternatives to the traditional supplements. The rising health awareness is leading to the opportunity of manufacturing condition specific product offerings which will clearly stand out in the market.

Expanding product portfolio to address immunity and digestion concerns & technological advancements in functional beverages are the focus areas of major players in the market. The consumer demands for a clean label have been on the rise. However, the manufacturers are unable to define it yet. Other restricting factors are stabilization challenge and undefined regulatory acts.

Market Segmentation

Energy drinks, sports drinks & nutraceutical drinks are the major segments of the global functional beverages market. The energy drink market was worth USD 50 billion in 2014 and is forecasted to be the fastest growing segment due to the steadily growing demand from health conscious consumers. A new health paradigm is evolving which places more emphasis on the positive aspects of diet. Nutraceutical beverages are the emerging class of natural products which helps in reducing the risk of chronic disease beyond basic nutritional functions. The nutraceuticals market is one of the fastest emerging markets due to its minerals and herbs content in the drinks. It’s also used to keep blood sugar levels under control leading to increased demand.

Consumers are now looking for variations in their daily drinks which include hydration with performance & even preventive measures taken for specific health conditions. The major ingredients used are vitamins, amino acids and omega-3 fatty acids. Amino acids are used to slow fatigue and vitamins are added to boost the metabolism and generate energy in functional beverages. Omega-3 is widely used and its market is forecasted to grow as it controls inflammation. Regular/daily intake of omega-3 offers various health benefits like improved cognitive function (especially for elderly and children), joint health, mental health, lowered incidence of heart failure and irregular heartbeat and lowered blood triglyceride levels. Such benefits spike the market to grow at a healthy CAGR. Pre and probiotics are another ingredients widely used in these drinks to ensure proper functioning of digestive system.

Key players are engaged in innovating production and packaging processes. The major packaging types are Pet bottles, Can, Pouch out of which Pet bottles are majorly in demand due to its user friendly make. New techniques such as flip open caps are introduced to better suit the product for consumer’s convenience. Other few innovations are the light weighted and sophisticated aluminium bottles with a premium look and feel, which are not only trending but are also recyclable & resealable with the screw cap closure options. Single dose new packaging is now becoming new normal for the consumers demand for the packaging that speaks to them directly without compromising on the traditional functions. Convenience stores, supermarkets, malls are the major sales channels opted by manufacturers to cater the larger population.

Regional Analysis

North America is the top consumer of functional drinks. U.S. is the major contributor in North America region due to trending of health awareness amongst all age group consumers, athletic regime, work culture, and busy lifestyle. Europe is the largest market for Nutraceuticals drinks due to rising consumer awareness about pro-health food and is estimated to grow at CAGR of 7% during the forecasted period. Asia-Pacific is forecasted as the fastest growing market. In terms of potential, countries such as Australia, China & India look attractive for business growth. Economic growth, changing lifestyle, health awareness are the major factors for the market attractiveness in this region. Other significant potential market is Russia in Europe.

Competitive Environment

The functional beverage industry is highly concentrated with top ten companies accounting for more than 50% of the market share. The leading players in the market are focused on innovative flavors and drinks, which are safe to consume, tastes good and are cheap in cost. The leading players are also concentrating on the ingredient usage and the labelling of the product as the demand for specific consumption by demographics (men, women & kids) is high. Investment in R&D to introduce new innovative products is another strategy adopted by manufacturers to stay ahead of the competition in matured market of North America and Europe.

Key Developments

A detailed analysis of the new trends in the marketChanging market dynamics in the industry such as increase in millennial generation, rising health care & wellness awareness and busy lifestyles have led to the growing demand for functional beverages.Historical, current and projected market size in terms of volume and valueIn depth market segmentation on the basis of type into energy, sports & performance, dairy, enhanced fruit, enhanced water, caffeinated and soy beveragesNorth America is the geographical regions exhibiting promising growth for functional beverageCompetitive Landscape focusing on players such as Redbull GmBH, Monster Beverage corporation, Rockstar Inc, Coca cola Co, Pepsico Inc holding about 45% of the market shareGiving an overall perspective on market performance